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New Jersey Chancery Division Finds Party Need Only Use A Reasonable Means Of Communication To Inform Parties Of Sheriff’s Sale Adjournment

In Wong v. PNC Bank, No BER-C-335-15 (Ch. Div. Apr. 26, 2016), the New Jersey Chancery Division discussed what constitutes reasonable notice of an adjournment to a sheriff’s sale in New Jersey. In 2014, in a predecessor action, the Court entered Final Judgment in favor of defendant PNC Bank (“PNC”), with respect to real property located in Franklin, New Jersey (the “Property”). 69 North Franklin Turnpike Limited Liability Company (“Debtor”) owned a 10% interest in the property and plaintiff Grace Wong owned 90% (“Plaintiff”). Plaintiff and her husband, Steven Wong, were both managing members of Debtor, each owning 50%. PNC requested a Sheriff’s sale, which was initially scheduled for May, 2015. PNC sent notice of the sale to Plaintiff via regular and certified mail and the Debtor’s counsel via certified mail and email. Plaintiff adjourned the sale twice and in April 2015, Debtor filed a chapter 11 bankruptcy petition. PNC advised Plaintiff and Debtor’s counsel via email that the sale was adjourned. The bankruptcy case was administratively dismissed for failure to file schedules. Steven Wong then filed for chapter 11 bankruptcy and counsel sent notice via email to PNC’s counsel demanding the sale be postponed due to the bankruptcy and threatened sanctions if the sale was not adjourned. PNC adjourned the sale and filed a motion in the Bankruptcy Court to determine that the automatic stay did not apply to the sale. The Bankruptcy Court found that the stay was inapplicable to the sale and PNC sent notice via email to Plaintiff and Debtor’s counsel that the sale would proceed on June 5, 2015. The Property was sold on June 5, 2015 at the Sheriff’s Sale and PNC was the successful bidder.

Plaintiff then filed a complaint that PNC violated the stay when the Property was sold at Sheriff’s sale and a lis pendens against the Property. PNC filed a motion to dismiss. The case was removed to the District Court for the District of New Jersey, which granted PNC’s motion to dismiss. The action was then referred to the Bankruptcy Court, which found that no stay violations existed, dismissed the now-amended complaint and discharged the lis pendens. Plaintiff requested that the Chancery Division vacate the District Court’s Order dismissing the Complaint.

The Chancery Division found that res judicata and issue preclusion bar Plaintiff’s complaint, which was identical to the complaint that was dismissed by the Bankruptcy Court. On the one new state law claim, the Chancery Division found that PNC gave sufficient notice of the Sheriff’s sale. Rule 4:65-2 requires that a foreclosing plaintiff serve a notice of sheriff’s sale at least ten (10) days before the date of the sale by regular and certified mail. However, the Rule is silent as to notice of adjourned sheriff’s sales. The Chancery Division found that the only requirement is that there was “some reasonable communication informing the property owner and other interested parties that the sale has been adjourned and the actual date of the sale.” The Chancery Division found that PNC served the initial notice via regular and certified mail and, thus, complied with the Rule. The Chancery Division then found that PNC provided Plaintiff with reasonable notice of the adjournments via an email address the Plaintiff had previously used to serve PNC and the parties had successfully used such communication in the action. Further, Plaintiff had notice when she sought an adjournment of the sale due to the automatic stay and cannot claim she was unaware of the sale.

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